Earnout Payments Clause Samples
The Earnout Payments clause defines the terms under which additional payments may be made to the seller after the closing of a business transaction, contingent on the business achieving certain financial or operational targets. Typically, this clause outlines the specific metrics (such as revenue or EBITDA) that must be met, the time period over which performance is measured, and the calculation and timing of any resulting payments. Its core function is to bridge valuation gaps between buyer and seller by tying a portion of the purchase price to the future performance of the acquired business, thereby aligning incentives and managing risk.
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Earnout Payments. Subject to the terms and conditions set forth in this Agreement, including this Section 1.04 and Article VII, Buyer shall make additional payments to the Management Shareholders (the “Earnout Payments”), as follows and such Earnout Payments shall form part of the consideration for the Shares and transactions contemplated hereby:
(a) The amount of the Earnout Payments shall be determined based on the Earnings Before Taxes of the Company on a consolidated basis and calculated in accordance with Schedule 1.04(a) (“Adjusted EBT”) for each of the calendar years ended December 31, 2007, December 31, 2008 and December 31, 2009 (each a “Measurement Period”). The aggregate Earnout Payment paid by Buyer for each Measurement Period shall be equal to the difference between (i) the product of (A) 3.6 times Adjusted EBT during the applicable Measurement Period, multiplied by (B) 0.95, and (ii) the sum of (X) the aggregate Purchase Price (including prior Earnout Payments) paid to all Sellers as of the date of such calculation and (Y) the aggregate amount that the Buyer is entitled to for indemnification claims under Article VII and for any working capital deficiency under Section 1.06. Prior to payment of any Earnout Payment to the Management Shareholders, any fee due to ▇▇▇▇▇▇▇▇ Inc. as a result of the Earnout Payment shall be paid by Buyer and the remaining amount of the Earnout Payment after deduction of any such fee shall be paid to the Management Shareholders. Each Earnout Payment shall be divided among the Management Shareholders in accordance with the allocation set forth on Schedule 1.04. Notwithstanding the foregoing, the total Purchase Price paid to Sellers pursuant to this Agreement shall not exceed £120,000,000 and no Earnout Payments shall be paid to the Management Shareholders to the extent such threshold is met.
(b) The calculation and payment of an Earnout Payment will be made within thirty (30) days following completion of the Company’s audited financial statements for the applicable Measurement Period and shall be paid, subject to any adjustments as set forth herein, in Section 1.06 or Article VII, by delivery of a Promissory Note for the amount thereof to the Management Representative, on behalf of the Management Shareholders.
Earnout Payments. (a) The Company Holders shall be entitled to an Earnout Payment with respect to each Earnout Period, payable solely in Earnout Shares, on or before each Earnout Payment Date, if (and only if) the Company’s Profit Adjusted Earnout Revenue for such Earnout Period (subject to Section 2.3(b) in the case of the First Earnout Period) is equal to or greater than the Minimum Earnout Revenue Target for such Earnout Period; such Earnout Payment to be calculated as follows:
(i) if Profit Adjusted Earnout Revenue in an Earnout Period is less than the Minimum Earnout Revenue Target for such Earnout Period, then the Company Holders shall not be entitled to an Earnout Payment with respect to such Earnout Period (subject to Section 2.3(b) in the case of the First Earnout Period).
(ii) if Profit Adjusted Earnout Revenue in an Earnout Period is equal to or greater than the Maximum Earnout Revenue Target for such Earnout Period, then the Company Holders shall be entitled to an Earnout Payment with respect to such Earnout Period equal to 100% of the Earnout Shares for such Earnout Period.
(iii) if Profit Adjusted Earnout Revenue in an Earnout Period is equal to or greater than the Minimum Earnout Revenue Target for such Earnout Period but less than the Maximum Earnout Revenue Target for such Earnout Period, then the Company Holders shall be entitled to an Earnout Payment with respect to such Earnout Period (subject to Section 2.3(b) in the case of the First Earnout Period) equal to the product of (x) the number of Earnout Shares for such Earnout Period multiplied by (y) the sum of (i) 0.33 and (ii) the product of 0.67 multiplied by a fraction, the numerator of which is the amount by which Profit Adjusted Earnout Revenue in such Earnout Period exceeds the Minimum Earnout Revenue Target for such Earnout Period and the denominator of which is the Earnout Spread for such Earnout Period.
(b) The Company Holders shall be entitled to a catch-up opportunity applicable to the Earnout Payment that the Company Holders may be entitled to receive for the First Earnout Period (if and only to the extent the full amount of Earnout Shares for the First Earnout period were not earned with respect to the First Earnout Period in accordance with Section 2.3(a)), which catch-up shall be calculated at the time of the calculation of the Earnout Payment for the Second Earnout Period as follows:
(i) if Profit Adjusted Earnout Revenue in the Second Earnout Period is less than or equal to $35,000,000, t...
Earnout Payments. The Company shall, and shall cause the Companies and their respective Affiliates to, comply with the terms and conditions of Section 1.7 of the Dakota Merger Agreement. The Company will act in good faith and not intentionally interfere or influence or otherwise take any action not in the ordinary course of business in such a way as to prevent or delay the payment of the Dakota Earnout, or cause such payment to be greater than the amount that would otherwise have been payable pursuant to Dakota Merger Agreement had the Company not taken such action. The Company hereby acknowledges its assumption of all of the obligations of Envoy relating to earnout payments under the CPS Merger Agreement.
Earnout Payments. (a) The terms below shall have the following respective meanings for the purposes of this Section 2.3:
Earnout Payments. The Seller shall be entitled to receive the 2005 Earnout Amount and the 2006 Earnout Amount, or such applicable portions thereof, if any, as deferred payment of the Purchase Price pursuant to the terms set forth below:
(a) If, and only if, the EBITDA of the Business for the fiscal year ending December 31, 2005 (the “2005 EBITDA”) is greater than THREE MILLION THREE HUNDRED FIFTY THOUSAND DOLLARS ($3,350,000) (the “2005 Baseline EBITDA”), then Parent shall pay to the Seller an amount (the “2005 Earnout Amount”) in cash equal to the product of (i) TEN MILLION DOLLARS ($10,000,000) multiplied by (ii) a fraction, the numerator of which shall be the difference between the 2005 EBITDA and the 2005 Baseline EBITDA, and the denominator of which shall be the difference between the 2005 Target EBITDA and the 2005 Baseline EBITDA, subject to a maximum possible 2005 Earnout Amount in all circumstances of TEN MILLION DOLLARS ($10,000,000).
(b) Parent shall pay to the Seller an amount (the “2006 Earnout Amount”) in cash equal to the lesser of (i) the applicable 2006 Earnout Cap or (ii) five times the EBITDA of the Business for the fiscal year ending December 31, 2006 (the “2006 EBITDA”), less EIGHTEEN MILLION DOLLARS ($18,000,000), less the 2005 Earnout Amount. For purposes of this Section 3.4(b), the “2006 Earnout Cap” shall equal (i) FOUR MILLION DOLLARS ($4,000,000) if the 2005 EBITDA is greater than FOUR MILLION FOUR HUNDRED THOUSAND DOLLARS ($4,400,000) or (ii) THREE MILLION DOLLARS ($3,000,000) if the 2005 EBITDA is less than or equal to FOUR MILLION FOUR HUNDRED THOUSAND DOLLARS ($4,400,000).
(c) Notwithstanding anything to the contrary contained herein, in the event that either (i) the Purchase Price is adjusted pursuant to Section 3.2(b) or (ii) Parent or Purchaser becomes entitled to indemnification under Article VII, Parent may, upon five (5) days prior written notice to the Seller, offset all or any portion of the Earnout Amounts, on a dollar-for-dollar basis, against the full amount of any such right to indemnification.
(d) On or before April 15, 2006, Parent shall provide to the Seller unaudited financial statements of the Business for the fiscal year ended December 31, 2005, together with a detailed written statement of its calculation of the 2005 EBITDA and the 2005 Earnout Amount, if any, related thereto (the “2006 Statement”), and on or before April 15, 2007, Parent shall provide to the Seller unaudited financial statements of the Business for the fisc...
Earnout Payments. (a) The Merger Consideration shall include, if earned, up to two additional payments (each, an “Earnout Payment”, and collectively, the “Earnout Payments”) based upon the Surviving Corporation’s Adjusted Earnings as follows:
Earnout Payments. (a) For the period beginning on the Closing Date and lasting until the eighteen month anniversary of the Closing Date (the “Earnout Period”), Buyer shall pay to the Seller, at the end of each fiscal quarter, in accordance with this Section 2.07, an amount (each an “Earnout Payment” and together the “Earnout Payments”) calculated by multiplying the Total ClearStory Revenues for such period by 30%. Notwithstanding anything herein to the contrary, as relates to the first $750,000 in accrued Earnout Payments (“Initial Earnout Payment”), such Initial Earnout Payment shall be held-back by Buyer and shall not be paid until twelve months after the Closing Date (“Initial Earnout Due Date”); provided, however, that Buyer shall have the right to offset against such Initial Earnout Payment any Damages owed by Seller to the Buyer as and to the extent set forth in Article XI. After payment of any such Damages and resolution of any such unresolved claim, any amount of the Initial Earnout Payments remaining owed to the Seller with respect to such claim shall be promptly paid to Seller by the Buyer. For avoidance of doubt, the parties acknowledge and agree that only the Initial Earnout Payment shall be subject to Buyer’s right of offset as aforesaid and nothing in the immediately preceding sentence shall affect the timing of, or Seller’s right to receive, any Earnout Payment other than the Initial Earnout Payment.
Earnout Payments. (a) Buyer shall pay to Seller an earnout equal to [**] of the Business Revenue plus [**] of Net Sales (each such payment, an “Earnout Payment”); provided that in no event shall the aggregate amount of the Earnout Payments exceed [**].
(b) Buyer shall make Earnout Payments within [**] following the end of each calendar year in which an Earnout Payment becomes due and payable pursuant to Section 2.6(a). Each Earnout Payment shall be accompanied by a written statement (an “Earnout Statement”) certified by an authorized officer of Buyer setting out in reasonable detail (i) the calculation of Business Revenue and Net Sales for such year and (ii) the Earnout Payment then due and payable.
(c) Subject to the other terms of this Section 2.6, upon at least [**] prior written notice from Seller, Buyer shall permit an independent certified public accountant reasonably selected by Seller, reasonably acceptable to Buyer and bound by customary confidentiality obligations pursuant to a written agreement with Buyer to inspect (during regular business hours) the relevant records maintained by Buyer or its Affiliate relating to the Earnout Payments, with such inspection (A) to occur no more than [**] (and, if initiated, to be completed within [**] after the delivery of the Earnout Statement for a given year, provided, that, such period shall be extended to the extent Buyer or its Affiliates have not complied with its obligations to reasonably cooperate with Seller as required by this Section 2.6(c)) and (B) be limited to time periods occurring within [**] prior to the date of such notice to Buyer. Results of any such review shall be binding on both Parties absent manifest error. If any such review reveals an error in the calculation or payment of Earnout Payments by Buyer, then (i) Buyer shall promptly pay Seller the amount remaining to be paid if such error reflects an underpayment to Seller and (ii) Seller shall promptly pay Buyer the excess payment amount if such error reflects an overpayment to Seller. The Seller shall bear the cost incurred in connection with the engagement of an independent certified public accountant pursuant to this Section 2.6(c), provided, however, if the findings of such independent certified public accountant shows a discrepancy between the amount of the Earnout Payment to which Seller is entitled and the Earnout Payment amount reflected by Buyer in the Earnout Statement in Seller’s favor, then in addition to the payment of the shortfall in the E...
Earnout Payments. Subject to paragraph 1(c) below, Earnout Recipients shall receive their pro rata portion of the applicable 2013 Contingent Deferred Payment, if any, subject to paragraph 1(a)(i) below, and the applicable 2014 Contingent Deferred Payment Per Share, if any, subject to paragraph 1(a)(ii) below.
(i) If the stand-alone operations of the AdoTube Business Unit results in a Gross Revenue equal to or greater than $28,000,000 (the “FY2012 Target”) for the fiscal year ending on December 31, 2012 (the “First Earnout Period”), the Acquirer shall pay each Earnout Recipient their pro rata portion of the 2013 Contingent Deferred Payment; provided, however, that if the Gross Revenue of the AdoTube Business Unit is less than the FY2012 Target but greater than 75% of FY2012 Target, the Acquirer shall pay each Earnout Recipient their pro rata portion of a percentage of the 2013 Contingent Deferred Payment equal to the applicable percentage set forth in the table below.
(ii) If the stand-alone operations of the AdoTube Business Unit results in a Gross Revenue equal to or greater than $40,000,000 (the “FY2013 Target”) for the fiscal year ending on December 31, 2013 (the “Second Earnout Period”), the Acquirer shall pay each Earnout Recipient their pro rata portion of the 2014 Contingent Deferred Payment; provided, however, that if the Gross Revenue of the AdoTube Business Unit is less than the FY2013 Target but greater than 75% of FY2013 Target, the Acquirer shall pay each Earnout Recipient their pro rata portion of a percentage of the 2014 Contingent Deferred Payment equal to the applicable percentage set forth in the table above.
Earnout Payments. In addition to the Total Closing Cash and the Deferred Cash Payment, Capricorn Sub shall pay to Seller contingent payments, if any, as follows: